Companies can evolve from a single product into a two-sided marketplace by starting with one side, usually sellers, through a SaaS or POS tool, then expanding. OpenTable shows how this transition can happen unintentionally. The chicken-and-egg problem of acquiring both buyers and sellers is the main hurdle.
And so you have shared a post that I mentioned right before we started recording that I wanted to touch on a little bit because it's come up here with founders in the community more recently, which is the kind of a transition from a product or service into more of a marketplace. So could you kind of walk us through that and what some of the main considerations are when doing so?
Sure. This is one of my favorite topics. So how do you take product, regular products and services and turn them into platforms, more generally marketplaces in particular? So I'll keep it short and sweet here. So if you're thinking just like as a marketplace founder, so marketplace perspective, we all know marketplaces are hard to start, right? If you're trying to start from day one as a marketplace, you gotta get buyers and sellers. There's chicken and egg problems. There's lots of issues. So in some situations, what happens, there's a way basically you can start as a pure product or service and later on turn it into a marketplace. You know, there's some good examples of this. You know, OpenTable is a good one. Started as sort of point of sale systems for restaurants, then became marketplace and there are others, right? I think so. What's interesting there is like, I'm not sure that all the companies that have done this were deliberate about it. So maybe initially they just wanted, I just wanna be SaaS or POS for sellers. It's like, oh, like now we have an opportunity to become marketplace, why not, right? But I think now that we understand this, I've certainly encountered marketplace founders where it just seemed like a good idea to think about, is it easier to start maybe by offering a standalone service to one side and then more easily transition to a marketplace later? So I approach it from that perspective.
Yeah. Now, as I mentioned, it's something we're commonly discussing here and, you know, it kind of goes both ways.
Sorry, just actually I would add one more thing there. So a little bit one more nuance sort of to give founders something to think about. So one of them is just pure products to one side or the other. A slight variation of this is what I call like start as a reseller or retailer. So this, think of like Amazon in the early days, there's no marketplace, they're buying and reselling stuff, right? So like instead of saying, hey, buyers and sellers of books or other services come and join my marketplace, which again is an inherent chicken and egg problem, it's an easier conversation at least, you know, to sidestep the chicken and egg problem by just going and buying the books and selling them in your name. So that's another, I'd say that's another way to do it. Uber initially, right? I mean, they basically hire drivers. You hire the drivers, you pay them, you guarantee a certain, certain amount per hour, they work for you, and then you get a bunch of, uh, riders. And then later on you turn and say, hey, we don't need to guarantee payments, you're just a free agent, you just get paid based on the number of rides you make.
